This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
News from Wall Street this week reminded me of the penguins that inhabit the icy, turbulent waters of the Southern Ocean.
These penguins are preyed upon mercilessly by tremendous, ravenous orcas – a terrible beast to feel gnawing on your leg if you derive your daily bread from the frozen, watery wastes.
It’s just another game for Goldman Sachs Group (NYSE: GS) – a “warehouse shuffle” that moves aluminum around while the big bank collects rent on the metal.
Although the rent on the stored aluminum – Goldman isn’t allowed to actually own the commodity – is just pennies a day, the vast amount of the metal it has stored in its 27 Detroit warehouses and the “warehouse shuffle” strategy that enables it to extend the rental period for months on end adds up.
Through the Metro International Trade Services subsidiary it bought in 2010, Goldman has accumulated 1.4 million tons of aluminum, which it stores at about 48 cents per ton per day. That’s about $672,000 per day of revenue – nearly half a billion a year.
Experts say the warehouse shuffle game ultimately raises the price of aluminum to manufacturers – everything from beer and soda companies to automakers. That extra cost, about $5 billion over the past three years, is passed on to consumers – you and me.
Unlikely political bedfellows Senators Elizabeth Warren (D-MA) and John McCain (R-AZ) have put their voices together to call for a 21st century version of the Glass-Steagall Act, also known as the Banking Act of 1933.
Everything runs on liquidity. Unless you know something I don’t, that dollar bill in your pocket is just as likely to buy a can of Pabst Blue Ribbon today as it was yesterday, and will be tomorrow.
Or you could sell 1,000 lbs. of gold – if you have that lying around – without fear of completely scuttling the global gold market. Your bank has to have cash, liquidity, lying around somewhere in the back if it wants to stay in business.
And in many cases, it’s easy to see or verify this liquidity. It helps everyone feel better about doing anything.
Pssst…Want to buy a watch? I don’t have one for sale, but I know some folks that are willing to sell you… well, it’s not a watch, but it’s something much, much better. They’ll sell you time. You want to buy some time?
Well, this ought to be interesting – not for what might be revealed, but for what will likely remain in the shadows.
One of the weakest, least effective regulatory bodies around, the Financial Industry Regulatory Authority (FINRA), is now saying they want to shed some light on “dark pools.”